Long Strangle options strategy
A long strangle buys an out-of-the-money put and call, costing less than a straddle but requiring a larger move to become profitable.
How the long strangle is built
Buy the 190 put for 5 and the 210 call for 5, for a total debit of 10.
Profit and loss at expiration
The expiration payoff is calculated as: Profit = max(190 − S, 0) + max(S − 210, 0) − 10.
- Maximum profit
- Large — unlimited on the upside and up to lower strike − debit on the downside.
- Maximum loss
- Limited to the total premium paid = $10 per share, between the strikes.
- Breakeven
- Lower strike − debit and upper strike + debit = 180 and 220.
Worked example
At an expiration price of 230, payoff = 20 − 10 = $10 per share.
When to use it
Use it when you expect a large move and want a cheaper alternative to a straddle, accepting that a bigger move is needed to profit.
Managing the risk
The wider breakevens mean the underlying must move more than for a straddle before you profit.
Frequently asked questions
Why is a strangle cheaper than a straddle?
Out-of-the-money options cost less, lowering the debit but widening the breakevens.
What market suits a long strangle?
One where you expect a sharp move but want to keep the upfront cost low.
Model this strategy
Open the free OptCurve calculator to plot the long strangle payoff, mark breakevens, and overlay it with other strategies.
Open the P&L calculator